May 27, 2016

Some Operator Comments Deserve the Front Page

MCD sensitivity to the loudest interest groups regardless of the facts has always been a problem and an embarrassment. Be it nutrition, social issues, paper products or wages MCD usually picks an issue then caves into a position that is later determined to be meaningless or unnecessary. The list is long and undistinguished. From whole wheat English muffins and cereals to planting thousands of tree's in urban areas that mostly died. In the face of tons of our own data small groups convince management that this is what our customers and the public wants. Only to later ask ourselves "what were we thinking?" 

We lose sight of the basic fact that we SELL food. We sell it to satisfy demand and to be profitable. It is our job to respond to what our customers want in terms of the food they are buying. Believe it or not our customers have the intelligence and the right to choose what they eat. So, let them choose. 

Our employee's are important people and their wages are important. However, wages are not the only cost in our business. In many if not most MCD restaurants as much as half of all costs are tied up in two line items. Those are Food and wages. Plus, so much of those cost are out of our hands. The Federal minimum wage and commodity cost are huge factors. Our menu boards are very thin in that there is just so much customers will pay for a sandwich. You can't just raise wages and then raise prices to pay for it. It doesn't work that way. As prices go up customers go away and jobs go with them. Those people who are demanding a near 90% increase in wages will be the first to tell you that they are not willing to pay 90% more for any product in our stores. 

It is not MCD place to tell our employee's to adjust their lifestyle so that they can live within their means. Those are decisions they have to make. 

I'm simply asking MCD to make good (better) business decisions. Understand that our purpose is not to be an instrument of social change or to be moved by the "flavor of the month" in political correctness. Focus on our customers demand for quality food and be profitable. 


Originally posted at:  McDonald's told: Stop bowing to liberal pressure groups!
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McDonald's Still Stonewalling Press on Leaving Oak Brook

McDonald's leaves door open for move to downtown Chicago - Chicago Tribune
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May 18, 2016

Disclosing McDonald's Marketing Plans

Desperate to get his name on the Internet this Oak Brook marketing person reveals
advertising start and duration information. If a McDonald's Operator did the same
they'd put their franchises at risk.

Exclusive: National/Local McPick 2 Coming - βurgerβusiness
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May 14, 2016

Yum Chairman: "I Have Always Rooted for McDonald's"

Yum! Brands Chairman: 'I Have Always Rooted for McDonald's' - TheStreet
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Union's Have Changed the Language

Sympathies go out to our friends in Miami Beach who have to live with such a
misguided and anti-business Mayor. 

Note the discussion is about minimum wage but he keeps referring to a "living wage". 
Organized labor has been very successful in changing the definition of the minimum 
wage. Now an employee is supposed to be able to buy a house, car, and support a
family on an entry-level pay rate.

Imagine a future where politicians have the power to determine a "living wage" and
use that power to buy votes. Every time they raise wages they send an inflationary
ripple through the economy and then everyone will stand around wondering why 
there's no economic growth. Then the liberal politicians will say, "I've got it, let's 
raise the living wage".

Trish Regan does a good job of taking him on but I doubt she made him any smarter.

The battle over minimum wage | Fox Business Video
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May 10, 2016

MCD Hits New High - Analysts Call for More New Products

McDonald's hits fresh all-time highs because of this key factor, analyst says
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Gone Click-Baiting'



Those who use the Internet as a news source are familiar with the term "click-bait". 
No matter what the content, a website earns income by generating "clicks" on their
headlines. Therefore the headlines become more startling and the content of the story
is less and less important.

It's easy for public companies to take advantage of this phenomena by pumping out 
trivial news knowing that reporters and bloggers will publish any piece of non-news just 
to get clicks.

Why else would the McDonald's spin machine publish a press release announcing a
four store garlic fries "test" on the west coast.

The "test" is appropriately small but it has been inappropriately hyped by the Oak Brook
PR department in their desperate attempts to  continue the "turnaround" story.

But now the four stores ran out of product - not such a big deal - McDonalds veterans will 
remember the supply problems in the early days of McRib. But this has generated a new 
round of click-baiting and the Oak Brook PR machine must claim a huge successes with 
garlic fries.

This most certainly means the product must now go nationwide and the decision will not 
have been made by McDonald's customers or Operators but by PR flacks in Oak Brook.

Once a new product idea is given national publicity it no longer can be called a "test".
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May 6, 2016

Wendy's Also in Spicy Fry Business

                                                     Ghost Pepper Fries - an LTO
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A Little Light Weekend Reading

Veteran analyst David Palmer of RBC Capital, long time fan of McDonald's, has 
published an extensive report: "Reading the mind of the U.S. fast food consumer".

An on-line copy is available HERE
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May 3, 2016

McCorp Should Not Be Allowed to Use the Word "Test"

If a company publicly discusses a "test" it's no longer a test, it's a corporate initiative.

For instance - McDonald's Corp discussing the "test" of Chicken McNuggets with no 
artificial preservatives - once they've discussed it with the press it's no longer a test.

What would Oak Brook do? Later tell the press, "We couldn't develop a product that
meets our quality and taste profiles without preservatives"?

Of course not, the "test" product has to succeed and must go national, no matter the
"test" results.

A good example, this misguided press release about Garlic Fries
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McDonald's ADB Scrambles QSR Breakfast Business

Leslie Patton at Bloomberg reports
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Supremes Turn Away Challenge to Min. Wage Law

Supreme court turns away challenge to Seattle law - WSJ
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May 2, 2016

Don't Miss This Interesting Operator Comment

I'm more optimistic than I've been in a long time with the leadership being provided by Easterbrook. However, I don't think he or others fully understand how many serious problems are being created by the regions. Too many Regional Managers, QSC VP's and their immediate staff have personal agendas, self importance, personal ambition and little concern for the system. MCD does not care about operator equity or about older operators leaving the system. All of that is just fine with them. They are allowing an environment of "Us against them" that is, the Region against the operators to grow and there is little oversight from Oak Brook. Overall compentcy in the regions have declined. Real Estate, finance, field service and leadership are terrible. The company recently closed over 200 stores that should have never been opened in the first place. Decisions are being made that have little to do with good business judgment or positive cash flow. Social issues are more important than profitability. I realize that new leadership has a big mess to correct but the entrenched staffing and attitudes are huge to overcome. In the meantime debt levels at the stores are increasing although sales are up they are not up enough. There are too many stores, too much discounting and too many operators. Smaller operators in average volume stores cannot participate in required reinvestments, payroll increases, fend off law suits without taking on more and more debt and accepting smaller returns on their own investments. Many can't afford to retire and the longer they stay in the harder it becomes. Many if not all of these problems have been self inflected by poor leadership by the company and by giving too much authority to the regions. Leadership at the top has got to get a firm grip on these issues and soon.
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